Three Steps to Transform into a “New” Finance Organization

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If you’re not innovating, you’re falling behind. This is true for any industry, but especially finance. The question is how to successfully manage change. It’s easy to get lost in many moving parts and lose sight of the original goal. What steps can you take to adopt innovative practices and remain as efficient as possible? Panelists Rob Kugel, research director at Ventana; Renee Ford, a managing director in Accenture’s SAP practice; and Birgit Starmanns, a senior director in marketing for finance solutions at SAP discuss the prospects of financial innovation – and how to get there – in a recent SAP Game Changers radiocast.

Step 1: Ditch spreadsheets where appropriate

Kugel dives into travel and expense reporting as a prime example of an area made unbearably tedious by Excel spreadsheets. The task is time-consuming for the traveler and just as laborious for the business. He says now is the time to find solutions.

“Software has the ability to be our personal assistant to speed and improve the effectiveness of enterprise processes.” Kugel’s research shows that companies relying heavily on spreadsheets take two days longer on average to close books than companies that use them infrequently. Why?

  • Lack of flexibility means spreadsheets don’t lend themselves to data visualization
  • Time-consuming and error-prone processes lead to mistakes that can affect decades of data
  • On-demand reporting now exists to quickly and accurately pull necessary information

Starmanns agrees, pointing out that by spending so much time consolidating Excel sheets, you’re missing the solid technology foundation that enables advanced analysis.

Step 2: Automate – for better or worse

Ford presents the automation conundrum with a quote from Bill Gates: “The first rule of any technology used in a business is that automation applied to an efficient operation will magnify the efficiency. The second rule is that automation applied to an inefficient operation will magnify the inefficiency.”

She advocates adopting automation with an open mind as “organizations can use technology to highlight bottlenecks and in some cases where they are really conscious of it, it can propel them forward.” In her opinion, automation should advance finance to a point where the finance function is contributing to the overall organization.

Step 3: Consider your people above all else

Starmanns asserts that “A huge part of implementing any new technology is really that change management piece, and it’s all about communicate, communicate, communicate. Some folks will be more comfortable and can hit the ground running and others… they are almost afraid.”

Ford echoes this sentiment, cautioning that technology is just one piece of the puzzle – it means nothing without capable minds to operate it. It’s important to make sure your workers are ready for the change that’s happening – and prepared to take on the change. You should decide where they need to be with technology proficiency and then get them up to speed.

As tech-savvy millennials start taking on more prominent roles in finance, the panelists think software adoption should become more rapid and intuitive, paving the way for prolific innovation.

Is your finance organization equipped to take these steps? Listen to the full radiocast to learn more.

Translate International Trade Regulations into a Competitive Advantage

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Isn’t the World section of Google news a pretty depressing read lately? There’s the Middle East conflict, upheaval in South America, and a crisis in Syria. Trying to keep the state of international politics straight is head-spinning – but what’s it like for those in the business world whose job it is to manage international trade? A recent SAP Game-Changers radiocast addresses this topic, and panellists Kevin Riddell, international logistics manager at Tremco Inc.; Rajen Iyer, cofounder and CTO of Krypt Inc.; and Marcus Puschke, principal consultant at SAP, discuss ways to reduce the growing complexity of international trade and accelerate it.

Regulations, sanctions, and restrictions!
There’s no way around them, and they get bigger all the time – and so does your compliance burden. According to Iyer, “It’s hard for companies to not just interpret those regulations and apply them in their business, but also look at how they can even automate the supply chain.” He believes that, when dealing with multiple geographies, different languages, and constantly changing regulations, the key to progress is automation.

But automation can’t help without support from the top down. Every organization needs a technology and innovation cheerleader, and, according to Riddell, it would help if these leaders share a few quirks with those who run the government and don’t mind curling up with a giant book of regulations.

Trade as a political chess piece
Moderator Bonnie Graham quotes Riddell as saying, “Trade compliance landscape is changing rapidly. Governments like the EU and the U.S. are using sanctions to exert influence on other countries’ policies. This means they can prevent their citizens from doing business with other countries or listed entities.”

Riddell explains that sanctions can be positive when enforced in lieu of military action. He also details how the list of sanctions can go beyond countries to individuals, including those who reside in the U.S. New sanctions are imposed each day, and your business must react immediately or face consequences.

Iyer suggests that an all-system automation process can help you manage your situation for exception cases where you can selectively release. You have to screen and make sure that you have documentation or that you have interpreted the rule correctly, and that’s why you involve lawyers before you set the system.

The essential human element
Riddell cautions, “You need expertise until artificial intelligence is completely in place. It’s going to be a human interfacing with the automation. And if that human isn’t properly trained or possessing the knowledge, you could still get into trouble.” Iyer agrees that continuous learning on the job is of the utmost importance.

As automation trends down to smaller companies and becomes more widely available, these businesses will be able to handle even more complex requests. Processes will be x-rayed from A to Z, and integrated compliance checks and customs clearance procedures will become a quality feature for a company excelling in these fields. The better you handle the data you transmit, the more trust you can gain from your business partners and from the authorities.

For more information on how to speed up international trade, listen to the full radiocast.

Is Risk Management Technology the Key to Sustainability?

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Today’s risk managers are between a rock and a hard place. They have to identify and implement the right risk management practices in order to prove that they’re adding value to the organization, comply with regulatory requirements, and sustain the business. But, with so many innovative technology options, it can be difficult to determine which risk management solutions they can use, if any, to ensure success.

In a recent SAP Game-Changers radiocast, panelists Saret van Loggerenberg, manager of risk and compliance for Exxaro Resources Limited; Scott Mitchell, chair of OCEG; and Bruce McCuaig, director of solution marketing for GRC solutions at SAP, share their thoughts on risk management trends, technology, and the human factor.

Defining the role of risk management

Risk management carries a different meaning for each organization, based on its needs, challenges, and goals. For Loggerenberg, governance, risk, and compliance (GRC) is not about ticking boxes for the sake of compliance; it’s about wanting to exist in the future. “It’s about how the company is directed and controlled, how to ensure that we make decisions effectively…and about remaining sustainable,” she says.

McCuaig agrees with Loggerenberg, adding that it isn’t enough to manage risk; organizations have to understand what causes risk in the first place. To illustrate his point, he shares some advice a fire inspector once gave him. “It does not matter how many fire extinguishers you have or what kind they are or how big they are, fire extinguishers don’t prevent fire,” he was told. “So just sitting here and trying to figure out how to control the fire does not really count. We need to understand what causes the fires.” The key is to manage risk before you even have to put a control in place, says McCuaig, and organizations are using technology to do just that.

Leveraging technology and the human factor to drive value

For risk management organizations, innovative technologies can “provide data, analysis, and information that informs us more about the world we don’t understand today…but we are going to have to play in tomorrow,” says Loggerenberg. The problem, she points out, is that “sometimes people implement technology because they think they are going to solve the problem with that, or that the technology is going to serve the purpose of what human behavior should actually do.”

Citing a recent risk management report, Loggerenberg says that, while 80 percent of risks have external root causes, 60 percent of them are people related. For this reason, “you cannot manage risk…without dealing with the human factor,” says McCuaig. “In fact, if all you did was deal with the human factor, you will probably be very, very successful at risk management.”

Mitchell concurs, and goes on to predict that the future of risk management lies in “a whole new wave of technology that is intended to help people in the enterprise get paired together for better decision making.” He expects that, instead of automating the human factor out of risk management, we need to look at collaborative technologies that will bring people together for decision making.

Navigating the path ahead

All panelists agree that the future of risk management is in technology. This includes everything from monitoring customer and employee sentiment on social media to using Big Data to identify trends and link cause-and-effect relationships. And, McCuaig says, “We have to do the right thing wrong a little bit and finally figure out how to make it work.”

For even more insights into risk management trends, technology, and the human factor, listen to the full radiocast.

Are Predictive Analytics the Best Weapon in Fighting Fraud?

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Fraud is as old as crime itself. Patterns emerge, are cracked, and then overhauled by crafty schemers. Methods become more sophisticated and evolve with technological innovations. In turn, companies must remain vigilant and adapt strategies against new types of attacks. Such strategies were the topic of a recent financial excellence radiocast for SAP Game-Changers, discussed by three expert panelists.

A sobering stat

If you think fraud is something that only happens to other companies, Derek Snaidauf, senior manager of advanced analytics with Deloitte, offers a startling wake-up call: “By some estimates, the typical organization loses five percent of its revenues to fraud each year, which translates to a potential projected global fraud loss of over $3.5 trillion.”

That number is not easy to dismiss, Snaidauf offers a few reasons for the growing fraud problem:

  • Further advances in technology
  • Improved coordination
  • Lower barriers to entry
  • Turbulent economic conditions

Fraud isn’t just on the rise in one area, but pervasive across all industries. Snaidauf says that the time for reactionary behavior and chasing lost payments is over. You need to prevent the dollars from going out the door in the first place.

A case for predictive analytics

President of the Cangemi Company, Michael P. Cangemi, believes most companies don’t leverage predictive analytics enough in disbursement areas, instead using a contingency firm to avoid double payments. This doesn’t fix the system – and then companies give half of the recovery money to a contingency firm. It’s not a sustainable model as the threat of fraud grows stronger.

“If you don’t think it’s happening, you’re just naïve,” Cangemi challenges. “The question is how much it is and then the cost benefit of implementing some kind of controls.”

Jérôme Pugnet, director of solution marketing for SAP solutions for governance, risk, and compliance, takes issue with the “predictive” label, because you cannot predict a specific event. Instead, he specifies, “It [software] helps you predict where it could happen, most likely, and how it could happen so you can be prepared.”

According to Snaidauf, a leading practice is having an enterprise fraud management office, the size of which varies based on the severity of your fraud problem. The trick is to break free from silos to centralize fraud applications throughout an organization, boosting their value. Institute a set of pillars to lead a successful fraud prevention program with:

  • Data scientists to build the rules and models
  • Investigators to pursue leads
  • Processes in place to treat and deal with fraud in the most effective manner with comprehensive analytics

A future of cooperation instead of competition

In the coming years, the panelists envision a climate where fraud detection approaches are far more open and shared across companies and industries. Big Data and social data will also play a large part in enhancing predictive models.

Pugnet takes this one step further, positing a theory that enhanced predictive capabilities will uncover trends that revolutionize the way employers treat their workforce. Motivating employees and treating them well could do a world of good in abating fraud. Instead of disgruntled employees with motives to commit fraud, there will be a team of workers invested in protecting the company from such actions.

Is your business ready to adopt predictive analytics in the fight against fraud? Get more information from the full radiocast.

Reimagine the Role of Internal Auditors

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If there’s any business group that could use a PR makeover, it’s the internal audit. Once a team that inspired dread and fear, it’s now undergoing a dramatic transformation, as discussed during a recent SAP Game-Changers radiocast, part of the Financial Excellence series. According to panel moderator Bonnie Graham, there are three reasons the role of internal auditors is changing:

1. Stakeholders are challenging internal auditors to up their game.
2. Boards are demanding better assurance of the value that internal auditors provide.
3. Management requires clearer insights.

Move from compliance police to strategic advisor

One of the panel guests, Malte Globig of the Flint Group, offers the idea that the internal audit group must act like external service providers, developing a better understanding of what’s important to their customers. If the company can more clearly understand the value their internal auditors are providing, it will be more willing to pay for their services, instead of looking to an external vendor. “We must never forget who our customers are,” Globig cautions.

Michael O’Leary of Ernst & Young goes a step further, saying, “What we are actually seeing is…the need for internal audit to innovate in order to keep up with such a fluid business environment.” He details three key principles for effective audit delivery:

1. People: Compile the right skill sets, the right talent, and the culture and geography that serve the needs of your company.
2. Processes: Streamline complex processes companywide to support the changing risk environment. Make sure that an internal audit function has the right people and processes for the company’s historical strategy, but also for the risks that lie ahead.
3. Technology: Deliver as much value as possible to stakeholders by adopting the most innovative technology. The percentage of spend that most internal audit groups dedicate to technology shows an upward trend that bodes well for internal auditors and the services they provide.

Take the audit mobile

Building on the discussion of advanced technology, moderator Bonnie Graham wonders whether introducing tablets to the audit process would enhance professionalism, ease evidence capture, grant instant data availability, and improve paper management.

Bruce Carpenter of SAP posits that, since we have all grown accustomed to using our mobile devices, providing auditors with tools like tablets is of paramount importance. He challenges internal audit groups to demonstrate innovation in each audit. Carpenter believes the increased sophistication of databases, and their ability to store structured and unstructured data, offer new opportunities to internal auditors; the enhanced insight that can be gained from such analysis raises the game of internal auditors’ work.

But the biggest and most welcome shift, Carpenter suggests, is that “the auditor is increasingly going to become a collaborator in business progress and that evolution is already starting to happen.” Rather than being seen as a numbers cop or a distraction, the auditor can be integrated more seamlessly into business processes.

Is your company ready to embrace this new role of the auditor? Listen to the full radiocast to find out more.

What Defines the CFO of the Future?

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It’s no secret that the financial world is dealing with a period of rapid change. Effectively managing these fluctuations is ultimately the job of the CFO – but what does the role of CFO look like now? A recent SAP Game-Changers radiocast explored this question with three panelists. Here are their opinions.

Diversify your duties

“Remain constructively discontent” might be the most useful advice to current CFOs and other financial leaders. This quote from Coca-Cola CEO Muhtar Kent was invoked by Kyleen Wissell, Corporate Director of Internal Controls within the office of the CFO at the Coca-Cola Company. She believes in a culture of innovation and growth – and that starts with strong entrepreneurial mentality at the top levels. Contentedness can lead to complacence, especially in a time of rapid advancement. A watchful eye on possible improvements inherently enables progress.

Elena Shishkina, CFO of SAP UK and Ireland, agrees. She multitasks in as many areas of the company as possible, because, as she says, “I don’t know how my role will look tomorrow. I strongly believe you can only achieve the best outcome for the team and for the organization if you lead with excellence.” Shishkina views herself not just as a leader in finance but a leader in overall business transformation.

Many CFOs now realize that their position is defined by more than a collection of numbers. Richard Sernyak, principle at PricewaterhouseCoopers responsible for the SAP finance transformation practice, concurs that statistics don’t paint a full picture of an organization’s financial health. Greater focus should be placed on unstructured data such as social media. He explains, “What’s important is that not everything that can be counted counts…you need to look beyond the data and really understand what’s important.”

Take control of a new role

The paradigm is shifting as CFOs need to keep up with their traditional, spreadsheet-intensive responsibilities while creating more value for the business. Some of the unique responsibilities now require CFOs to:

1. Act as the lynchpin across the company for presenting actionable information in a dynamic way.
2. Enable proactive, predictive modelling in real time on mobile devices.
3. Enhance performance by spending less time on tasks that don’t provide added value.
4. Look past the numbers to see their context.
5. Take a more holistic view of the business by adopting innovative technologies (which we discussed in another recent radiocast).

Leading a top-notch finance department requires more soft skills than ever before, according to Wissell. CFOs must draw upon emotional intelligence, considering their internal customers, external customers, and opportunities to introduce a pure model that touts more of a specialist view.

As the transformation marches on, all panelists agree that championing technology will become paramount for the CFO. Sernyak sees the role becoming more intertwined with that of CIO as more millennials flood the marketplace and eventually move into leadership positions. Beyond an affinity for fast-paced innovation, Shishkina asserts that CFOs of the future must be culturally aware and sensitive to different aspects of diversity.

That’s quite a list of attributes! So are you a CFO of the future? Listen to the full radiocast.

Real-Time Finance: Helping Strong CFOs Transform Their Businesses

From Birgit Starmanns, SAP

Life happens in real time. Buying a new TV? You probably research your purchase , read reviews, and compare prices online. Get store opening times, directions, and parking. Even check your account balance. All the information you need is at your fingertips.

You’re constantly making decisions based on the best available data at any given moment. So why can’t you do the same for your business?

Particularly in times of market volatility, when organizations are bombarded by risks and opportunities, finance functions need a precise view of the past, immediate insight into the present, and a clear perspective on the future.

But all too often, a disjointed landscape of IT applications and silos of data mean that the best you can hope for is reliable historical information. Why? Because it takes so long to piece together the picture that the present has already elapsed.

What Is Real-Time Finance?

Real-time finance starts with being able to align all corporate data effortlessly to provide a single source of truth. It demands agile information delivery—to help you make decisions, take action, and adjust plans based on what’s happening right now. And increasingly, it relies on predictive capability to anticipate risks and understand trends and business drivers before they impact the business.

Real time isn’t simply about accelerating your business—it’s about reinventing it. It’s about having insight and foresight whenever you need it, wherever you need it, and business processes that can adapt dynamically. That might mean:

  • Being able to provide intercompany reconciliation on the fly
  • Detecting potential fraudulent activity
  • Gaining visibility into your cash position at any given moment
  • Evolving from a periodic to a continuous financial close

To find out more about the transformative potential of real-time finance and the art of the possible, visit the innovations radio show.